Problem 6-12 Project NPV Marsha Jones has bought a used Mercedes horse transporter for her...
70.2K
Verified Solution
Link Copied!
Question
Finance
Problem 6-12 Project NPV Marsha Jones has bought a used Mercedes horse transporter for her Connecticut estate. It cost $50,000. The object is to save on horse transporter rentals. Marsha had been renting a transporter every other week for $215 per day plus $1.75 per mile. Most of the trips are 80 or 100 miles in total. Marsha usually gives Joe Laminitis, the driver, a $40 tip. With the new transporter she will only have to pay for diesel fuel and maintenance, at about $0.60 per mile. Insurance costs for Marsha's transporter are $1,950 per year. The transporter will probably be worth $30,000 (in real terms) after eight years, when Marsha's horse Spike will be ready to retire. Assume a nominal discount rate of 7% and a 3% forecasted inflation rate. Marsha's transporter is a personal outlay, not a business or financial investment, so taxes can be ignored. Calculate the NPV of the investment. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) NPV
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
